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Bank Hapoalim admitted yesterday that it evidently lost a quarter-billion shekels in the fourth quarter of 2008, missing its projection once again.

If the bank is accurate, its loss reflects a negative 4-7% return on equity for the year, while Hapoalim had predicted returns of 0-2%.

On October 13 Hapoalim projected it would end the second half of 2008 with profits of more than NIS 1 billion, but it finished with earnings of less than NIS 200 million.

The NIS 250 million fourth-quarter loss is more than analysts had expected. Some thought Hapoalim could end the year in the red, or at the worst, with a small loss.

The bank blames its heavy quarterly loss on the mounting worldwide economic crisis, and mainly, on the dramatic interest rate cuts in Israel and elsewhere, which diminished the value of derivatives it holds.

Simultaneously, the bank published its business plan for 2009. The bank's recent off-the-mark projections didn't stop it from announcing a target of a 4-7% return on equity for the year, and a return to capital adequacy of 12% by the end of 2009, from 11.4% at present.

Hapoalim says that despite the prevailing uncertainties, which include Israel's security situation (as always) and the impact of the security situation on domestic economic developments, it expects to achieve a positive return on equity this year.

One of its assumptions in its business plan is that while the current crisis will persist in 2009, there won't be a major downturn in the global banking sector.

Public confidence in the banks will return, Hapoalim projects, as will interbank business.

Another assumption is that Hapoalim and other banks will be able to raise the necessary capital to operate and expand their banking activity.

Bank Hapoalim also assumes that the economic situation of borrowers will not necessitate more substantial provisions for bad debt, beyond levels forecasted in its work plan, and that the political-security situation will not deteriorate.

Despite its anticipated quarter-billion shekel loss in the fourth quarter, Bank Hapoalim shares gained nearly 6% in trade on the Tel Aviv Stock Exchange yesterday.